Broadband panelists square off on economic development, and each other

What happens when you put three industry representatives in a room to discuss …

A recent discussion hosted by BusinessWeek and available as a webcast (video, free registration required) highlights some of the advantages and difficulties on the road ahead as we progress in the broadband era. The roundtable discussion includes commentary from Dr. John Rutledge, Chairman of Rutledge Capital and former advisor to the Reagan and Bush administrations; Christine Heckart, General Manager of Marketing for Microsoft TV; Leo Hindery, Jr., Managing Partner of Intermedia and former CEO of AT&T Broadband; and host Steve Rosenbush.

All of the guests agree that more and better broadband access will be required if the US hopes to remain competitive in the global market, but the form of that access, as well as the best methods of achieving it, places them at odds with each other. China is poised to graduate more engineers this year than the US, Germany, and Japan combined, so staying competitive has moved from a theoretical notion to a very real concern. All agree that broadband continues to be a high-grade economic engine.

As may be expected given his background, Rutledge sees capital generated by business to be the most important issue. It is his belief that the primary goals for the future should include adding spectrum to broadband to reduce its cost, trimming the FCC to create a less-regulated market, outlining clear and simple property rights for the infrastructure owners, and possibly, using the "bully pulpit" of the presidency to drive technology into the educational system. He argues that it isn't a problem if content and infrastructure are supplied by the same company, and advocates protection for content owners, even if content is tied directly to infrastructure (for example, if Comcast wouldn't allow material produced by its subsidiaries to be shown on other cable or satellite systems).

Heckart advocates more of a hands-off view than either of the other panelists. She believes that an unregulated market will find its own equilibrium which best caters to the needs of the country. It is her position that, while broadband availability continues to be an issue, it is the lack of devices with which to access that broadband that provides the greatest concern. In essence, poor and rural people are less likely to have PCs. Therefore, when broadband finally brings the Internet to TVs, universal access will be more likely. She points out that, if the US is to accept some sort of mandate for what defines universal access, a minimum set of requirements needs to be defined before we can meet that mandate. Heckart also brings up the 1984 AT&T settlement with the Department of Justice, and uses it as an example of regulations that continue to bind the hands of business long after their goals have been achieved.

Surprisingly for a recently former AT&T staffer, Hindery repeatedly touts the need for universal broadband access, no matter what the income level or geographic location of the user. He also argues in favor of some type of regulatory system to prevent vertical abuses by companies that use their control over both content and infrastructure to wield an unfair advantage over competitors. He distinguishes between the attitudes toward broadband of three classes of nations: developing nations, which see broadband primarily as a communications medium; emerging nations such as China and India, which see broadband as a generator of capital; and mature nations, which see it more as an entertainment medium than anything else.

It's clear that broadband and economic development are tied together at this time, and the point is made that recent studies have shown a 1 percent increase in phone lines tends to correspond to a 3 percent increase in GDP—at least assuming a certain unspecified critical mass of connections is achieved. If it's unclear in that statement exactly which is the chicken and which is the egg, that's fine, because the two statistics probably are symbiotic in nature.

All of the panelists make good points. I would be hard-pressed to sit and argue economics with them at their level, and I won't try. I do think that the idea that bringing broadband to the TV experience equates to economic opportunity is an oversimplification which may be forgiven from someone in the marketing department of Microsoft TV. Similarly, I think history has shown that complete deregulation can lead to abuses which are mitigated when some type of controls are installed, while overregulation (or misguided and erroneous regulation) can be damaging as well. Perhaps a happy medium exists between the two extremes?

The webcast lasts about an hour and has a few dry spots. However, it's good viewing for anyone interested in seeing a variety of opinions and occasional arguments from industry leaders on the issues surrounding broadband penetration. Much of our future economy (and individual careers) may be tied to how the government chooses to approach this important topic, so you may want to check it out.